Olongapo City vs. Subic Water and Sewerage Co., Inc.

Execution by motion is available only within five years from the date of entry of judgment, and any writ issued thereafter is void for lack of jurisdiction; moreover, solidary liability must be expressly stated and cannot be presumed from a mere request in a compromise agreement signed by a corporate officer without board authorization.

Presidential Decree No. 198 authorized the creation of local water districts. Pursuant thereto, Olongapo City transferred its water facilities to the Olongapo City Water District (OCWD). A dispute arose regarding unpaid obligations, leading to a 1997 compromise agreement approved by the Regional Trial Court. Thereafter, OCWD entered into a joint venture that created Subic Water, which took over OCWD's operations. OCWD was subsequently dissolved in 1998.

• The Underlying Dispute: In 1990, Olongapo City instituted Civil Case No. 580-0-90 against OCWD for sum of money and damages, alleging failure to pay electricity bills and remit contractual shares under Section 30(b) of Presidential Decree No. 198.
• The Joint Venture: On November 24, 1996, OCWD entered into a Joint Venture Agreement with Subic Bay Metropolitan Authority, Biwater International Limited, and D.M. Consunji, Inc., resulting in the incorporation of Subic Water. Subic Water was granted a franchise to operate water and sewerage services in the Subic Bay Free Port Zone and Olongapo City, and subsequently took over OCWD's water operations.
• The Compromise Agreement: On June 4, 1997, Olongapo City and OCWD executed a compromise agreement whereby OCWD undertook to pay P135,909,467.09 amortized over 25 years. The agreement contained a provision requesting that Subic Water "be made as co-maker" for OCWD's obligations. Mr. Noli R. Aldip, then chairman of Subic Water, signed the agreement on behalf of Subic Water without any board resolution or authorization.
• Assignment and Dissolution: On November 24, 1997, OCWD executed a Deed of Assignment transferring all its rights in the Joint Venture Agreement to Olongapo City. OCWD was judicially dissolved on December 15, 1998.
• Execution Proceedings: On May 7, 1999, Olongapo City filed a motion for execution, which the RTC granted on July 23, 1999, but no writ was actually issued. On May 30, 2003, Olongapo City filed a second motion for execution. The RTC issued an order on July 29, 2003 directing the issuance of a writ, and the writ was issued on July 31, 2003 against "OCWD and/or Subic Water."
• Subic Water's Challenge: Subic Water filed a special appearance with motion to reconsider and quash the writ, asserting it was not a party to the case and that the writ was issued beyond the five-year period. The RTC denied the motion on October 7, 2003.

• Excusable Delay: Petitioner acknowledged the five-year rule for execution by motion but maintained that the delay in securing the writ was caused or occasioned by the actions of OCWD and Subic Water, thereby falling under the recognized exception.
• Solidary Liability: Petitioner argued that Subic Water was liable as OCWD's co-maker and successor-in-interest under the compromise agreement, which identified Subic Water as the entity that "took over the operations" of OCWD.
• Corporate Consent: Petitioner contended that the signature of Mr. Noli Aldip, then chairman of Subic Water, signified the corporation's consent to be bound by the compromise agreement.

• Improper Remedy: Respondent countered that certiorari under Rule 65 cannot substitute for a lost appeal under Rule 45, especially where the petitioner allowed the reglementary period to lapse through negligence.
• Prescriptive Period: Respondent argued that the five-year period for execution by motion under Section 6, Rule 39 of the Rules of Court had lapsed, rendering the July 2003 writ null and void for lack of jurisdiction.
• Lack of Participation: Respondent maintained that as a stranger to Civil Case No. 580-0-90, it could not be bound by the judgment or the writ of execution.
• Absence of Solidary Liability: Respondent argued that the compromise agreement did not expressly state solidary liability as required by Article 1207 of the Civil Code, and that Mr. Aldip lacked authority to bind the corporation without board approval.
• Separate Corporate Existence: Respondent asserted that it was a separate juridical entity from OCWD, and the corporate veil could not be pierced absent proof of fraud or wrongdoing.

• Propriety of Certiorari: Whether certiorari under Rule 65 is the proper remedy to assail a final decision of the Court of Appeals.
• Execution by Motion: Whether execution by motion is available after the lapse of five years from the entry of judgment.
• Solidary Liability of Non-Party: Whether Subic Water may be held solidarily liable for OCWD's obligations under the compromise agreement.
• Authority to Bind Corporation: Whether the chairman's signature bound Subic Water to the compromise agreement.
• Piercing the Corporate Veil: Whether the corporate veil may be pierced to hold Subic Water liable for OCWD's debts.

• Propriety of Certiorari: Certiorari under Rule 65 is improper where appeal under Rule 45 is available; the remedies are mutually exclusive, and certiorari cannot substitute for a lost appeal occasioned by the petitioner's own negligence or error in choosing the remedy.
• Execution by Motion: Execution by motion is available only within five years from the entry of judgment pursuant to Section 6, Rule 39 of the Rules of Court; a writ issued pursuant to a motion filed beyond this period is null and void for lack of jurisdiction, as the court loses authority to act on the motion after the prescribed period.
• Solidary Liability of Non-Party: Solidary liability must be expressly stated under Article 1207 of the Civil Code; a mere request in a compromise agreement that a third party be made co-maker, without express acceptance or assumption of solidary liability by the third party, does not create a solidary obligation.
• Authority to Bind Corporation: A corporate officer cannot bind the corporation without authorization from the board of directors under Section 23 of the Corporation Code; the absence of board approval or proof of authority renders the officer's act unenforceable against the corporation.
• Piercing the Corporate Veil: The corporate veil cannot be pierced absent proof that the separate corporate personality was used to justify a wrong, protect fraud, or perpetrate a deception; mere takeover of operations and stock ownership do not justify piercing, and OCWD's status as a 10% shareholder of Subic Water does not equate the two entities.

• Certiorari vs. Appeal — Certiorari under Rule 65 and appeal under Rule 45 are mutually exclusive remedies; certiorari is available only when no plain, speedy, and adequate remedy exists in the ordinary course of law. Certiorari cannot be used as a substitute for a lost appeal, particularly when the loss was caused by the party's own negligence.
• Five-Year Rule on Execution — Under Section 6, Rule 39 of the Rules of Court, a final judgment may be executed on motion within five years from its entry; thereafter, enforcement must be by independent action filed before the judgment is barred by the statute of limitations (ten years under Articles 1144 and 1152 of the Civil Code). The court loses jurisdiction to issue a writ of execution by motion after the five-year period.
• Solidary Liability — Under Article 1207 of the Civil Code, solidary liability exists only when the obligation expressly so states, when the law requires solidarity, or when the nature of the obligation demands it; it is never presumed and must be clearly shown.
• Corporate Authority — Under Section 23 of the Corporation Code, corporate powers are exercised by the board of directors; no person, not even an officer, can validly bind a corporation without authority from the board, whether express, implied, or apparent.
• Piercing the Corporate Veil — The doctrine applies only when the separate corporate personality is used to justify a wrong, protect fraud, or perpetrate deception. Probative factors include: (1) stock ownership by one or common ownership of both corporations; (2) identity of directors and officers; (3) the manner of keeping corporate books and records; and (4) methods of conducting the business (Concept Builders test).

• "Certiorari is not a substitute for a lost appeal."
• "The limitation that a judgment be enforced by execution within five years, otherwise it loses efficacy, goes to the very jurisdiction of the Court. A writ issued after such period is void, and the failure to object thereto does not validate it, for the reason that jurisdiction of courts is solely conferred by law and not by express or implied will of the parties."
• "Solidary liability is not presumed."
• "A corporation, as a juridical entity, primarily acts through its board of directors... no person, not even its officers, can validly bind a corporation" without authority from the board.

• Pasiona v. Court of Appeals, G.R. No. 165471 (2008) — Distinguished certiorari under Rule 65 from appeal under Rule 45, emphasizing that the remedies are mutually exclusive.
• Arambulo v. Court of First Instance of Laguna, G.R. No. L-31814 (1929) — Established that jurisdiction to issue a writ of execution by motion is limited to the five-year period from entry of judgment.
• Ramos v. Garciano, G.R. No. L-22341 (1969) — Reiterated that a writ of execution issued after the five-year period is void for lack of jurisdiction.
• Palmares v. Court of Appeals, G.R. No. 126490 (1998) — Held that solidary liability must be expressly stated and cannot be presumed.
• Concept Builders, Inc. v. NLRC, G.R. No. 108734 (1996) — Enumerated the probative factors for piercing the corporate veil.
• People's Aircargo and Warehousing Co., Inc. v. Court of Appeals, G.R. No. 117847 (1998) — Affirmed that corporate officers require board authorization to bind the corporation.

• Section 1, Rule 45 — Mandates that appeals from the Court of Appeals to the Supreme Court shall be by petition for review on certiorari.
• Section 6, Rule 39 — Provides that a final judgment may be executed on motion within five years from the date of its entry, and thereafter by independent action before barred by the statute of limitations.
• Article 1207, Civil Code — States that solidary liability exists only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.
• Section 23, Corporation Code — Vests corporate powers in the board of directors or trustees.
• Articles 1144 and 1152, Civil Code — Prescribe the ten-year period for enforcing judgments.

Antonio T. Carpio (Chairperson), Mariano C. Del Castillo, Jose Portugal Perez, Estela M. Perlas-Bernabe